Posts

How I realized that I’m dumb…or insurance math for morons…

Sometimes you realize that you’ve been doing something dumb for years. Like really, genuinely, obviously, demonstrably, mathematically dumb.

This week, that occurred. I realized that I, Mr.UpwardlyMobile, have been randomly paying tons of extra money to a car insurer and never realized the product that I was buying was insanely overpriced for my needs.

It all started when I realized that I should advise my auto insurer that I’m driving less mileage because my new job has a shorter commute. I thought that I was so brilliant and that this would save me $10-$15 every month. I updated the information and realized that it would only save me about $4.00 a month to drive half as many miles annually.

I started wondering, why are my semi annual bills for car insurance so high?

On my policy, I have full collision, glass, the works… I don’t intend to debate the pros and cons of those options as they aren’t necessarily super expensive in and of the selves. That said, they’re really expensive when you set them up wrong, like I did. I had those products set with a $500 deductible. The difference in cost between a $500 deductible on everything and $1000 deductible on everything is listed as $19.00. As I pay my bill every six months, that really didn’t seem significant amount. Seriously, who cares about $3.00 per month. Except it wasn’t $19.00 per billing period…. The difference was $19.00 per month… My big question as to why my coverage seemed expensive, was staring me in the face

At $19.00 per month, I realized that I’ve been paying about $120.00 more every 6 months for 3 years. What’s worse is that the difference in cost for the difference between a $500 deductible and a $1000 deductible was such that it means that I was basically paying that $500 difference every 25 months despite not having a car accident.

It’s as though I was gambling that I’d have an auto accident more often than once every two years! Who the hell has a car accident every other year? Definitely not me. I certainly don’t need to pay my auto insurer an extra $240 per year for some low cost deductible that I’m probably not going to use. I can’t get that $720.00 back for three years of stupidity on this policy. That said, I can remind you all to keep an eye on the true cost of a deductible. Unless you’re betting that you’ll need it frequently, the low deductible probably isn’t worth it.

This is the lesson, do the math and determine the actual benefits of the products and services you’re buying. You might find that you’re being as dumb as me.

Sincerely,

MrUpwardlyMobile, a guy that stupidly donated $720 to a car insurer for no mathematically sound reason.